Survey: 63% Corporate Pension Plans
Underfunded

According to a Watson Wyatt survey, 63% of company plans
were underfunded, a dramatic increase from the 16% in that
status in 1998. The consulting company defines a fully
funded pension plan as one where the market value of plan
assets is sufficient to cover at least 100% of benefits
accrued by employees to date.

But that doesn’t mean officials were sitting on their
hands. The survey found that 70% of responding companies
ploughed more than the ERISA funding minimums into their
plans during 2002, up from the 43% doing so in 1992.
“With almost two-thirds of pension plans falling short, we
expect to see many companies struggling in the midst of a
very bad economy to make massive cash contributions to
improve their funding levels,” Kevin Wagner, a Watson Wyatt
retirement practice director, said in a statement.

Official: ‘Don’t Panic’

However, the Watson Wyatt official cautioned that
corporate benefits managers shouldn’t panic. “The best
course of action is to focus on developing appropriate
funding policies that balance the capital needs of the
underfunded pension plans against the overall capital needs
of the organization, keeping long-term goals in mind,”
Wagner said in the statement.

Labeling the Wilshire survey “alarmist,” the
National Association of State Retirement
Administrators (NASRA) said the report didn’t adequately
take into account that pension plans are designed to fund
their liabilities over a long period of time.